David B. Fein, United States Attorney
for the District of Connecticut, today announced that Richard Pinto, 68, of
Wellington, Florida, and Peter Pinto, 37, of East Quogue, New York, each
pleaded guilty late Friday, May 11 before United States District Judge Stefan
Underhill in Bridgeport to one count of conspiracy to commit wire fraud, bank
fraud, and money laundering and one count of wire fraud stemming from a $10
million fraud scheme they executed while executives at Oxford Collection
Agency.
“These defendants carried out a
significant fraud scheme through which they stole millions of dollars from
their company’s clients, lenders, and investors,” stated U.S. Attorney Fein.
“We are committed to working with IRS-Criminal Investigation, the FBI, and
SIGTARP, and the other members of the Connecticut Securities, Commodities, and
Investor Fraud Task Force, to root out these schemes and prosecute responsible
individuals.”
According to court documents and
statements made in court, Oxford Collection Agency was a private financial
services company that engaged in accounts receivables management, primarily
debt collecting, with offices in New York, Pennsylvania, and Florida. Businesses
and other entities contracted with Oxford Collection Agency to collect debts on
their behalf. Between approximately January 2007 and March 2011, Richard Pinto
served as the chairman of the board and was the de facto head of Oxford
Collection Agency, and his son, Peter Pinto, served as the president and chief
executive officer, overseeing Oxford Collection Agency’s daily activities.
During that time, the Pintos collected debts on behalf of various clients,
including Washington Mutual Bank, Dell Financial Services, Cogent
Communications, Labcorp, and others, under the pretense that they would report
all such collections to their clients. Instead, the Pintos and others caused
Oxford Collection Agency to routinely withhold collected debts from certain clients,
running up what was referred to internally as a client’s “backlog.” The Pintos
and others then diverted various funds from their client remittances and used
them for their own ends.
Starting in April 2007, the Pintos
secured a line from credit from Connecticut-based Webster Bank, a bank that
received funds through the Troubled Asset Relief Program (TARP), without
informing Webster Bank about its significant client backlogs or outstanding
payroll taxes. The Pintos and others sent falsified financial statements to
Webster Bank, eventually increasing the credit line to $6 million and laundered
funds from the credit line to promote the ongoing fraud scheme against their
clients. During that same period, the Pintos also solicited millions of dollars
in investments from various investors without ever disclosing to their
investors the existence of their backlogs. The Pintos also transferred some of
the investor funds into Richard Pinto’s personal bank account without investor
knowledge.
Victims lost more than $10 million as a
result of this scheme.
Judge Underhill has scheduled sentencing
for September 13, 2012, at which time Richard and Peter Pinto face a maximum
term of imprisonment of 35 years and a fine of up to approximately $20 million.
This matter is being investigated by the
Internal Revenue Service-Criminal Investigation, the Federal Bureau of
Investigation, the Special Inspector General for the Troubled Asset Relief
Program (SIGTARP), and the Connecticut Securities, Commodities, and Investor Fraud
Task Force. The case is being prosecuted by Assistant U.S. Attorney Liam
Brennan, Deputy U.S. Attorney Deirdre Daly, and Special U.S. Attorney Jonathan
Francis.
In December 2010, the U.S. Attorney’s
Office and several law enforcement and regulatory partners announced the
formation of the Connecticut Securities, Commodities, and Investor Fraud Task
Force, which is investigating matters relating to insider trading, market
manipulation, Ponzi schemes, investor fraud, financial statement fraud,
violations of the Foreign Corrupt Practices Act, and embezzlement. The task
force includes representatives from the U.S. Attorney’s Office; Federal Bureau
of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Secret
Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal
Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange
Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of
the Special Inspector General for the Troubled Asset Relief Program (SIGTARP);
Office of the Chief State’s Attorney; State of Connecticut Department of
Banking; Greenwich Police Department and Stamford Police Department.
Citizens are encouraged to report any
financial fraud schemes by calling, toll-free, 855-236-9740 or by sending an
e-mail to ctsecuritiesfraud@ic.fbi.gov.
This case was brought in coordination
with the President’s Financial Fraud Enforcement Task Force, which was
established to wage an aggressive and coordinated effort to investigate and
prosecute financial crimes. The task force includes representatives from a
broad range of federal agencies, regulatory authorities, inspectors general,
and state and local law enforcement who, working together, bring to bear a
powerful array of criminal and civil enforcement resources. The task force is
working to improve efforts across the federal executive branch, and with state
and local partners, to investigate and prosecute significant financial crimes,
ensure just and effective punishment for those who perpetrate financial crimes,
combat discrimination in the lending and financial markets, and recover
proceeds for victims of financial crimes.
To report financial fraud crimes, and to
learn more about the President’s Financial Fraud Enforcement Task Force, please
visit www.stopfraud.gov.
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